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How companies can unintentionally buy ad slots they don’t want

In class we talked about targeted ads and the sale of specific ad slots to advertisers. Advertisers have valuations for each of the ad locations that Google is selling. Under this framework for ad space markets, one would expect no advertisers to put ads up next to content that they don’t want to be associated with, for instance offensive content, as these companies wouldn’t want to do business with the demographics that typically engage in this content, and would thus place no value on these ad locations.

This isn’t what we see, however. As described in this article from CNBC, Google recently found itself under fire for placing ads next to neo-Nazi and jihadist videos. Theoretically, Google wouldn’t want to sell ad placements next to offensive and dangerous media like this, and companies also wouldn’t want to purchase these spaces. So how does this happen?

In practice, when companies want to advertise on Google, they actually don’t buy ad placements; rather, they buy behavior. Specifically, according to the article, buyers bid on demographics or topics, and are awarded a share of exposure. Where precisely the ads end up is decided solely by algorithms, not by people. As a result, if a company wants to advertise to, for instance, 25-34 year old men who are interested in politics, they may end up purchasing ad slots next to alt-right propaganda.

Some companies with particularly large marketing budgets can avoid this issue by purchasing space next to content that has already been screened and approved by the platform. Google does this with YouTube via their Google Preferred system. In this case, companies do actually have an idea of what specific ad slots they’re purchasing. However, this represents a very small percentage of the total ad sales Google makes, as most brands don’t quite have the funds.

If we were still in the era where TV channels had the most valuable ad space, this problem wouldn’t exist. But now in the age of networks and automation, it’s easier than one might think for companies to purchase ads that they don’t actually want.

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